One reorder formula, set in 2021, runs every item in the warehouse. Reset by item and replayed against a year of orders, the new points raise 2,100 items, lower 4,900, and improve stockouts and cash together.
The purchasing manager decides where the reorder point sits for each of 9,000 items. The rule is one formula for everything, two weeks of average demand plus two weeks of safety stock, set in 2021. It feels fine because the manager overrides it from memory when something looks wrong. A single formula is wrong in both directions at once: too low on volatile items with long lead times, and too high on slow movers.
We name the baseline. The 2021 formula stays in every comparison, judged on stockouts and on cash together, never on one alone.
We write down the expectation before the data is opened. Most of the cash should sit in slow movers, and most of the stockouts should come from fewer than 1,500 items.
We build on 2023 and 2024. Each item gets a forecast of demand over its own lead time, with its own variability, and a service target by item class.
We freeze the points and write down a forecast of a 95.9% fill rate on $3.70M of inventory. Then we replay every 2025 order line once against both sets of points. The replay returns 95.6% on $3.75M.
We try the simpler ways. Recomputing the old formula on current demand recovers about a third of the gain. A safety stock by ABC class recovers a little over half of the cash and about three fifths of the stockouts. Neither matches the item-level points on either count.
We hand back the points as a field the ERP's suggested-order screen reads, the list of items that moved and why, the memo, and the test cell design.
Under the current formula, 1,180 items produce 71% of the short lines.
So what Raising 2,100 points goes after the items behind most of the short lines, without touching the rest.
Lowering 4,900 points takes $450,000 out of average inventory, worth about $90,000 a year at a 20% carrying cost.
So what The money to fund the higher points is already on the shelf.
The old formula on fresh demand closes about a third of it. A safety stock by ABC class closes a little over half of the cash and about three fifths of the stockouts.
So what The gain comes from setting each item on its own history, not from updating one number.
The purchasing manager reviews a suggested-order list built on the new points and overrides by exception, with the reason recorded. For one quarter, half the product lines, chosen at random, run the new points and half keep the old formula. Comparing fill rate and inventory between the halves tests what the replay assumes.
The replay holds 2025 demand and lead times fixed. A stockout that sent a customer elsewhere is missing from the demand it replays.
The $450,000 is average inventory once the lowered points work through. On slow movers that takes most of a year.
A year with a supplier shock or a lost account would move the points, and a quarterly refit is what catches it.
We'll tell you what your own history can say about it, and which offering fits. If none does, we'll say that too.
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